Gold Price Forecast: XAU/USD struggles near one-week low as USD, bond yields scale higher

• Gold continues losing ground for the fifth straight day and drops to over a one-week low.
• Aggressive Fed rate hike bets, rising US bond yields, a stronger USD weighs on the metal.
• The risk-off environment does little to impress bullish traders or ease the bearish pressure.

Gold remains under some selling pressure for the fifth successive day on Tuesday and drops to over a one-week low, around the $1,660 area during the first half of the European session. A fresh leg up in the US Treasury bond yields, along with a stronger US dollar, turns out to be key factors driving flows away from the non-yielding yellow metal.

In fact, the yield on the benchmark 10-year US government bond inches back closer to the 4% threshold amid expectations that the Fed will tighten its monetary policy at a faster pace to tame inflation. The bets were lifted by the overnight hawkish remarks from Fed Vice Chair Lael Brainard, reiterating the US central bank's commitment to bring inflation down.

Elevated US Treasury bond yields push the USD higher for the fifth straight day, which, in turn, is seen exerting additional downward pressure on the dollar-denominated gold. Even, the prevalent risk-off mood - amid growing recession fears, geopolitical risks and fresh US-China trade jitters - does little to lend any support to the safe-haven precious metal.

The market sentiment remains fragile amid worries about economic headwinds stemming from rapidly rising borrowing costs. Apart from this, a further escalation in the Russia-Ukraine conflict and the worsening trade ties between the world's two largest economies temper tempers investors' appetite for riskier assets. This, however, fails to provide any respite to the XAU/USD.

There isn't any relevant market-moving economic data due for release from the US. Hence, traders on Tuesday will take cues from speeches by influential FOMC members. This, along with the US bond yields, should influence the USD price dynamics. Apart from this, the broader market risk sentiment might contribute to producing short-term opportunities around gold.

The focus, however, will remain on the FOMC meeting minutes, due on Wednesday, and will be followed by the latest US consumer inflation figures on Thursday. The US CPI is expected to remain stubbornly high and reinforce the Fed's hawkish rhetoric. This, in turn, suggests that the path of least resistance for gold is to the downside.

Technical levels to watch